Georgina Henderson, who runs Foam Fashion in Hart Street, Henley, claimed she should not have to pay full rates as building work outside her store was affecting her trade.

Last week, the Henley Standard reported that South Oxfordshire District Council had been granted a liability order to pursue Ms Henderson for £1,202 in unpaid business rates from earlier this year as well as £120 in court costs.

However, Ms Henderson has now been told by the Valuation Office Agency that she is eligible for a retrospective reduction in rates, which she hopes will cover the outstanding amount.

Her rates have been reduced from £13,000 to £10,000 for the period from February last year, when the work started, to September when it is scheduled to end.

Ms Henderson said: “I was paying just over £6,000 a year in business rates but because of the reduction that’s now down to £4,800.

“It’s not brilliant but the valuation officer told me it was much higher than they usually give out in these instances. He also said they don’t do compensation so I didn’t see the point in trying to get any more.

“The district council will presumably now recalculate and send me a new bill but as I’ve paid £4,800 already, the £1,200 I still owe should be wiped out. I haven’t had anything in writing from the council yet so until I hear from them I can’t say for sure.”

Ms Henderson estimates she has lost more than £20,000 in takings since work began to build two houses in the courtyard behind her store.

Three parking spaces in front of the shop were fenced off to create space for skips to put building rubble in and Ms Henderson says customers have left her shop due to the noise and smell.

She was forced to take out bank loans to help finance the business and arranged with her landlord to pay reduced rent. Ms Henderson said: “I knew the work would affect trade but until I sat down and worked it out I didn’t realise how much of a difference it had made.

“I’m still paying little bits of rent to my landlord and I don’t know if this reduction is going to be enough for us to stay afloat because these works have seriously damaged our position.

“The business was on the edge anyway so to lose an extra £20,000 is hard and we can’t afford that.”

Ms Henderson is pinning her hopes on a successful summer season, when she hopes the fenced-off area may be temporarily removed.

She thanked Henley residents for their backing, saying: “The number of people who have come into the shop showing support has been overwhelming. Last year the cage was removed in July for the summer and I imagine it will be again this year.

“We are going into the summer now and the shop is full of lovely stock so we just need to get back on track. I’m still up against it and still need to pay business rates this year, which I haven’t been able to so far.

“If the council had enforced the money last week it would have been the end of Foam but this way I can go through summer and try to catch up when the cage is gone.”

A South Oxfordshire District Council spokesman said: “The Valuation Office Agency has verbally informed us that Ms Henderson will be entitled to a reduction in her business rates.

“Once we have received confirmation we will be writing to her to confirm her new reduced liability. This should be within the next two weeks.

“In the meantime, we would urge Ms Henderson to return the retail rate relief application form we sent her earlier in the year in order to claim a further £1,000 against her 2014/15 charge.”

A spokesman for the Valuation Office Agency said: “We cannot comment on individual cases but if a ratepayer feels the rateable value is not a fair reflection of the rental value at April 2008, they can contact us to review it and there is no charge for this service.

“Any ratepayer whose property is affected by changes in their area can check the fact sheet and find out how their valuation is worked out on our website.”

Henley developer Court Park Properties is building the houses on behalf of River 88.